The ultra inflationary policies of the FED which has created an unprecedented explosion of the money supply means that with the threat of even more funny money investors may want to consider buying metals while shorting the Nasdaq as a hedge. Certainly, the trade is not without risk. However, with a horrid economy and more printing, I would continue to think hard assets should outperform most asset classes. We like timberland and farming here, but in that respect we are outcasts in the financial world. That’s okay… we don’t want to be popular or our ideas to be well received (if agreeing with everyone is your goal you’re probably on the wrong side of trade).
Tag Archive for SIVR
Both gold and silver are now solidly above their 200 day moving averages and the divergence between stocks and metals may be reversing a bit with stocks falling and metals rising. Certainly, metals are the better inflationary hedge as evidenced by currency collapses throughout history, but in today’s technologically advanced stock market focused society anything can happen so long as the puppett masters can still control their Frankenstein-like creation of bubbles and super-bubbles.
Do we need more regulation? Against monopoly and those who seek to end competition, yes. Against mom and pop farmers and the chick who owns a small shoe store in Albuquerque? Hell No. Leave the small business owners and Dairy Farmers alone.
Like clockwork we had our great and stoic hero threaten the tape with more money printing and that seems to have shored things up. All the better for me, as I moved around half of my trading account (Jaguar Alpha) into Silver the other day after I wrote that I would rather be in silver than in stock for my anticipated Bernanke bounce.
I once actually received a nasty comment from an IP address listed in the home town that Dr. B. comes from in GA… That commenter called me a racist, which is not true. Thankfully, my comment box is so jammed up with spam that I had to disable comments at hedgephone regardless for the time being.
Other issues: I had a face to face with a 6 foot brown bear and had to hike out 15 miles because my car broke down — remember when making timber investments to have a solid, running work truck and also that mother nature rules in the wilderness!!!
I am working on some formatting issues with Apple — I know in Apple’s browser that Hedgephone looks strange and I’m on it!
In any event, we asked Dr. B to print it up and he delivered on Q — I do think it’s better to stop the slides before they violate the 200 day moving averages… Even though I hate it that our economy is now solely based on the stock market, that the stock market is almost completely corrupt thanks to bad INSIDERS in CORPORATE AMERICA and not bad stock brokers or traders as much as BOOK COOKERS, I do recognize that Americans have much of their net savings in the stock market and that many companies are ethically run despite the fact that the SEC is watching porn and not busting scam companies from stealing their shareholders’ money!
In any event, we hope that things turn around and that the SEC starts investigating public corporations, their corrupt board of directors and officers, and the supply chaain and middle management teams that suck these companies dry and leave shareholders flat broke. Just because laziness isn’t a crime does not mean that the SEC should stop investigating corporations which lose 90% of their shareholders’ capital!
THE INTERNET BUBBLE: So I have been arguing at Hedgephone that once Facebook went public the investment bankers would get their huge fees and would stop needing to use the media to pump up the equity bubble that is going on with web 2.0… Sure there is a ton of value in the new media space but that value is not being purchased by today’s equity investor on the Nasdaq — the money was already made by the venture capital and private equity investors… Now, all that buyers of many of these stocks are getting is an empty bag of permanent capital loss. Anyway, we were pretty spot on with our web 2.0 call but made some mistakes recommending AMZN as short versus directly shorting FraudBook (I mean Facebook!). AMZN is more overvalued, but the suckers like it better and the suckers are hard to bet against right now!
Because the tape is starting to look downright scary. 2.5% down days are things of the past because this is a new bull market!!! Lol… remember all of the talking head shills on CNBS that said that stocks were heading to the moon? I do, and it’s always a good excersize to study the cold hard reality of just how awefull the investment “community” is at actually performing their day to day jobs, but I digress…
The Bernankenstein Pump is finally getting dumped and the ponzi-tape painting-manipulation game that went on daily for the past few years (remember all of those QE days where ALL of the banks made money every single day?) is finally ending and ending badly…
Just when you thought things would turn around (even I sort of did or at least considered it a possibility) the market takes another nosedive because the Fed is no where to be found.
In another 10%, Ben better start printing and printing fast or we are heading for the really, really big iceberg for the banking sector. Europe’s financial banking oligopoly is bigger, less organized, and lazier than even our own investment banking cheese-opoly and it’s starting to crumble in rapid fashion.
I am hoping that stocks rise, but I ended up buying some silver instead for a Bernanke put trade.
Were traders really expecting more QE today? Seems pretty bizarre and more likely the work of some HFT BS than anything else.
Silver dropped by 5% erasing all of yesterday’s gains and threatening to reverse below important support/resistance lines. While the breakout is not completely negated, traders will likely play it safe in Silver until the highly volatile trading picks one direction or another. For now, I would hold all physical and buy more on days like today. That said, Silver has come pretty far over the past few years so investors may want to put money into hard assets than have not risen so much like housing, farmland, timberland, etc…
So much for “Sunday Fun-Day” tonight… Most longs are likely soaking up their tears with a glass of Merlot this evening with the Russell 2000 futures off 3% tonight and the Nasdaq 100 down over 3% as well. Gold and silver are SURGING, with gold up over 2% and Silver up ove 5% tonight. I view Silver as the better play here and if the metal holds the $40 mark we could easily see a retest of $50 which is a nice 25% gain from here. With the downgrade, however, I want my readers to stop thinking of gains and losses in terms of Dollars and begin to get them to think of gains and losses in terms of gold and silver. At any rate, the ponzi-nomics continue and Bernanke and the other central banksters will be printing furiously in the near future which should be good for silver and gold most certainly while equities have a lot of problems facing them in the near future.
So for our part our long gold and silver and short stock thesis which we have been HAMMERING our readers with over the past year still pretty much holds right now. There are some cheap names I am looking at right now including OSK, HAST, PBR, STO, HES, and others but the technology stocks trading over 100X earnings look to be obvious and profitable shorts here.
All in all, stay safe out there — these markets are brutal for those with a “buy and hope” strategy.
Europe is imploding with Greek yields up to 35% — Portgual, Spain, etc… look very weak and the banks holding their paper are under pressure. My gut tells me to be ready for a pump job rally in the short term that will prove to be a selling opportunity.
While I am slightly bullish Florida residential real estate, I am resolutely bearish on the REIT sectors… The REITS are not a contrarian investment, but Florida real estate is somewhat more contrarian of a play.
I am sticking with my allocations, but investors should consider a stock replacement strategy on their index shorts and gold and silver paper holdings….
Bullion is always a good investment as long as Bernanke is in office…
So here is where we stand:
Equities: lowering short position to 30%
Metals: maintaining 30% exposure to the long side
Commodities: maintaining a 25-20% allocation to Rogers Index
Cash: 10% and waiting to buy cheap stocks
Equities Long: some cheap stocks can be purchased below liquidation value, but I expect better values in the future.
Politics are driving the stock market, and it appears to me that the FED is now buying and selling stocks again given the large increase in M2 — the FED desperately needs to be audited, but this might never happen because everything Ron Paul says is swept under the rug of absolute corruption. It’s time for CHANGE, meaning Bernanke and the other crooks who got us into this depression need to be ousted and replaced by people without ties to the banking “system.” The Fed is essentially run by the investment banks at this point and they are insolvent here… Unless we want to be insolvent as well, we are going to have to get new leaders to replace the old, failed leadership. Obama has kept the status quo — more debt, more wars, more bailouts to the banks, and more allegiance to Goldman, DB, JPM, etc… We need someone who will come in and reinstate GLASS STEAGALL! What a nightmare…
Inflation is the ultimate hidden tax, and we pay higher food and energy prices so that the DOW can go up and silver shoots to the moon…
Here is what I’m thinking on PM’s — even though they have broken out to new nominal highs, I would expect a selloff to “initiated” by the banks and FEDS on Sunday night or Monday, so go ahead and take a third of your position off the table in after hours.
I may be wrong on this short term retracement call, and longer term I am extremely bullish silver and gold — I was out of Silver for the move from $40 to $50 thankfully, but now I am back in from around $36 or so and I’m bullish but also a skeptic of almost every asset class as they are all manipulated by those with big money…
Anyways, keep stop losses tight and be prepared to go to cash (though I prefer Australian, Canadian, Chinese, Norwegian, and Swiss currency to US Dollars)….
Stocks are political here, and the FED wants them to go up, so keep your stops tight… If you follow my trading model, we got out of half of our short position yesterday in after hours. Right here I am still bearish but I feel a half to a third of a position makes a ton of sense — it is earnings season and earnings were boosted by the largest stimulus in US history… There may be a rally on Earnings, but it is likely a rally you want to sell into….
gold and silver seem better over the longer term, but always set a stop loss order and for me a 7% stop loss is a good place to set them as you won’t get whipsawed as badly out of the metals using such a stop.
Anyways, my Market Models are as follows:
STOCK INDICIES: 1/3-1/5 of a full short position via slightly in the money put options or put spreads (preferable)
Commodities: 1/3 of a full position long an RJI
Metals: 1/3 of a full position mixed between gold and silver
Positions should be defined as the amount of capital you are willing to lose….
In other words, today we moved from a 1/2 short position on stocks to a 1/3 short position on stocks for nice gains… Monday we will reasses the trading climate and adjust our exposures accordingly.
Investors have pushed silver above the recent channel high at around $39 or so per ounce and I fully expect a retest of $50 if any more talk is given about QE3 — Silver rises because of the rising digital money supply, not from speculation. Owning cash is speculative whereas owning metals is conservative or a safe haven at current prices.
Many people will tell you that silver and gold are in a bubble but the fact is that commodities in general are one of the only asset classes that work here because the consolidated banking system is holding our economy hostage and Bernanke is solely focused on saving the banks. Right now, shorting European banks and going long silver and gold looks to be about as good of a “trade” as possible — investors are essentially betting that Europe will face massive credit problems because of the obvious insolvency of Greece, italy, Portugal, Spain, and Ireland.
The next shoe to drop is the US… We are facing the exact same issues as Greece. Japan is also a debt zombie and has been for years now. There deflationary spiral is confusing to say the least, but they are essentially bankrupt as well in my view.
Low global interest rates are the only thing holding the current order afloat, but any hike in interest rates could derail the system and for that reason owning real assets outside of the financial system makes a good deal of sense.
Hope that helps, Gold is a little overbought but it’s in a long term bull market. Silver is looking solid here.